OpenAI to defend against Musk's fraud charges in restructuring lawsuit
What's the story
A US court has rejected OpenAI's bid to dismiss Elon Musk's fraud allegations, allowing the lawsuit over the company's restructuring to advance.
The ruling marks a pivotal moment in the legal battle, which centers on OpenAI's transition from a non-profit to a for-profit entity.
Musk, a co-founder, claims that OpenAI failed to uphold its commitment to operate as a public charity and instead planned a shift toward being a for-profit entity.
Legal proceedings
Judge dismisses some claims against Microsoft
The presiding judge, Yvonne Gonzalez Rogers, also dismissed some allegations against Microsoft, a major investor in OpenAI.
However, she dismissed other claims against OpenAI like racketeering and false advertising.
The legal battle between Musk and OpenAI CEO Sam Altman comes as the start-up is in talks with officials in Delaware and California over its restructuring plans.
Restructuring pressure
OpenAI's restructuring deadline and funding implications
OpenAI is reportedly under pressure to finish its restructuring by the end of 2025.
According to Bloomberg, if the deadline is missed, SoftBank Group could cut its funding for the start-up from $30 billion to $20 billion.
In that case, OpenAI could look for other investors.